U.S. firm keen to buy The Pas mill

Hey there, time traveller!
This article was published 14/10/2016 (3277 days ago), so information in it may no longer be current.

A U.S. company looks to be close to buying and operating the Tolko paper mill in The Pas, potentially saving hundreds of jobs in the northern community.

Premier Brian Pallister said Friday the government had passed a regulation allowing prospective purchaser American Industrial Acquisition Corp. to defer some required pension contributions for three years to help conclude a deal.

Sources close to the deal said the pension issue was one of the few remaining obstacles in transferring ownership to the new company.

Pallister, meeting told reporters Friday, he is cautiously optimistic a deal will be struck.

“I want to emphasize that this is a step in the right direction, but this is not a… done deal,” he said.

“We are hopeful. This is hopeful news for the people of The Pas and the people of Manitoba. But more work needs to be done,” he said.

Tolko had announced plans to shut down the paper mill on Dec. 2.

The Pas Mayor Jim Scott was upbeat about the latest development.

“This is a profoundly good day,” Scott said. “Obviously, this is a tremendous step forward.”

Tolko workers and the town of The Pas are both making sacrifices to get a deal done.

Mill employees have agreed to a 10 per cent wage rollback, Unifor national representative Paul McKie said.

He estimates the pension deferral is worth about $10 million a year to the prospective buyer.

The town, meanwhile, would grant the purchaser a three-year municipal tax holiday worth $450,000 per annum, said Scott.

“It’s something the whole town is going to have to bear down and deal with, (but) I’m not hearing very much opposition,” Scott said.

Kelsey School Division superintendent Julia McKay said from The Pas that her division has not been asked to waive Tolko’s $238,259 in annual school taxes, which are 5.3 per cent of Kelsey’s annual tax revenue.

Scott anticipated a “seamless transition,” with the plant continuing to operate with the same workforce making the same products, precluding the need for environmental hearings.

The Free Press sought comment from American Industrial’s New York office, but the call was not returned.

Pallister said the corporation “has a record of successfully turning companies around.”

He said it owns dozens of companies, including operations similar to the one in The Pas.

The premier would not say if the province is offering any additional incentives or tax breaks to American Industrial to get a deal done.

“I’d want to be very, very careful not to do anything in any way to jeopardize a positive result for the people of The Pas and for the people of Manitoba,” he said.

McKie said Unifor and another union representing mill employees, the Canadian Steelworkers, met almost three weeks ago with Tolko and American Industrial.

“They laid down the conditions of the purchase,” he said. “They wanted a permanent pension moratorium, which has never been granted to a private company,” he said.

Instead, the province agreed to a three-year contribution exemption.

McKie said there are four pension plans among the various employees, each with separate units of retired pensioners and active workers.

It would take one-third of the members of any group to block the agreement, he said — required votes on pension deferrals have yet to take place.

American Industrial said if any group objected, the deal was off, McKie said.

However, the union rep said there is likely not enough time for retirees to mount a campaign against the contribution deferrals, given the tight timeline laid down by the province.

The new regulation would give the purchaser more time to address a shortfall in the employees’ pension plans —believed to be in the neighbourhood of $20 million.

Pallister said such a move is not unique and does not absolve the would-be purchaser of its legal obligations.

The NDP said it appreciated the government’s measure but hoped the Progressive Conservatives had driven a hard bargain with American Industrial before it agreed to grant the pension reprieve.

“Have they got long-term commitments that this company is going to be running for any significant amount of time? Or did they (allow) the moratorium and not get anything in return?” asked party spokesman Tom Lindsey, MLA for Flin Flon.

“We need to make sure that they got concrete, in writing, agreements that this plant is going to keep running,” he said.

larry.kusch@freepress.mb.ca

nick.martin@freepress.mb.ca